South Korean operator Lotte Duty Free's takeover of the 18 liquor and tobacco concession stores at Changi Airport next year could mean a wider array of products and more competitive prices for travellers, observers said.
Lotte will have a treasure trove of data on consumer buying habits, possibly giving it a leg-up in expanding to other parts of Asia, they said.
It beat two other companies to win the liquor and tobacco concession tender which was awarded by Changi Airport Group (CAG) yesterday to an operator other than the DFS Group for the first time.
South Korean firm The Shilla Duty Free, which operates the perfume and cosmetics stores at Changi Airport, and Gebr Heinemann of Germany were the two other bidders.
The contract awarded to Lotte is for six years from June 9 next year, and covers more than 8,000 sq m of retail space across Changi's four terminals.
DFS Group announced in August that it would be pulling out of the airport after nearly 40 years, saying that it was not "financially viable" to continue, given changing regulations on the sale of liquor and tobacco and global uncertainties.
The travel retailer said it would continue to operate luxury con-cessions at Changi, as well as its T Galleria outlet in Scotts Road and its Singapore Cruise Centre business. It also said it would be expanding elsewhere.
In a statement yesterday, CAG said Lotte put forward the strongest overall proposal.
No. of stores at Changi that will get a fresh look.
As the world's second-largest travel retailer in terms of sales turnover, with stores in countries such as Australia, Japan and Vietnam, Lotte also has a proven track record, CAG said.
Lotte Duty Free is part of the Lotte Corporation conglomerate, which has a portfolio that ranges from food and beverage products - including liquor - to department stores and hotels.
CAG said all 18 stores at Changi will get a fresh look and incorporate new liquor boutique concepts and activities such as customised whisky-blending. It also said it will work with Lotte to introduce consumer events.
Renovation works on the new outlets will be conducted in phases to ensure that passengers' shopping needs are met at all times, CAG said, adding that Lotte's offerings will be available on the iShopChangi online store from June 9.
DFS, which has come under fire for its handling of a recent retrenchment exercise, did not respond to queries on the status of the 500 staff impacted by the closure of its liquor and tobacco stores in Changi. It previously said their options would include working with the new operator. Lotte also did not respond to queries.
To succeed where DFS failed, Lotte must cater to the preferences of different segments as well as improve the experience for time-starved travellers, experts said.
Mr Amos Tan, a senior lecturer at Singapore Polytechnic's School of Business, noted that Singapore's tightening of regulations around the sale of alcohol and tobacco is outside of the concession operator's control.
In April, the duty-free allowance for spirits, wine and beer was lowered from 3 litres to 2 litres.
The minimum legal age for smoking will be raised from 18 to 21 by 2021, while cigarette packs sold here must have standardised packaging and larger graphic health warnings from July next year.
Thus, ensuring the right product mix and a pleasant shopping experience is key, Mr Tan said. "When travellers return from overseas, everyone is rushing to collect their luggage and to get out. So, it is about maximising that 15 to 20 minutes that they have."
Dr Seshan Ramaswami, associate professor of marketing education at Singapore Management University, said that having a bigger range of price points "might help cater to the hugely diverse population of passengers that transit Changi".
Aside from providing a platform for Lotte to introduce its liquor brands to a wider market, its stores here will provide a wealth of data on consumer buying patterns, experts said.
"Airports give you insights into different regions and countries, which gives you a competitive edge in expanding," said Mr Tan.